UNOFFICIAL COPY OF HOUSE BILL 1040 I1 5lr2499 CF 5lr2457 By: Delegates Wood, D. Davis, Moe, Jameson, Miller, and Minnick Introduced and read first time: February 11, 2005 Assigned to: Economic Matters 1 AN ACT concerning A BILL ENTITLED 2 Financial Institutions - Consumer Credit - Mortgage Originators 3 FOR the purpose of prohibiting an individual from acting as a mortgage originator on 4 or after a certain date unless the individual is a licensee or is exempt from 5 licensing under this Act; providing that a license issued under this Act 6 authorizes a licensee to act as a mortgage originator only when acting within the 7 scope of employment with a mortgage lender; prohibiting a licensee from 8 maintaining more than one license or being employed by more than one 9 mortgage lender; requiring the Commissioner of Financial Regulation in the 10 Department of Labor, Licensing, and Regulation to include certain items on each 11 license; prohibiting an individual from acting as a mortgage originator under a 12 name or for an employer that is different from the name and employer that 13 appear on the license unless certain conditions are met; authorizing the 14 issuance of a license to an individual employed by a mortgage lender, the 15 principal office of which is located outside the State, if certain conditions are 16 met; establishing certain qualifications for obtaining a license; authorizing the 17 Commissioner to deny an application for a license under certain circumstances; 18 establishing procedures for applying for a license; requiring the Commissioner 19 to conduct an investigation to determine if an applicant meets certain 20 requirements under this Act; requiring the Commissioner to issue a license to an 21 applicant who meets certain requirements; establishing procedures for the 22 approval, provisional approval, provisional denial, and denial of an application; 23 providing for the expiration of a license; establishing procedures for renewal of a 24 license; prohibiting the Commissioner from refunding any part of a license fee 25 under certain circumstances; authorizing the Commissioner to determine that 26 licenses issued under this Act shall expire on a staggered basis; establishing a 27 Mortgage Lender-Originator Fund; providing that the Fund shall consist of 28 certain items; requiring the Commissioner to pay certain fines and penalties 29 into the General Fund of the State; establishing the purpose of the Fund; 30 requiring the annual State budget to include certain items; authorizing the 31 making of certain expenditures from the Fund under certain circumstances; 32 requiring certain amounts in the Fund to be carried forward under certain 33 circumstances; providing that the State Treasurer is the custodian of the Fund; 34 providing that the Fund is a special, nonlapsing fund that is not subject to 35 certain provisions of law; requiring the Governor to appropriate certain funds in
2 UNOFFICIAL COPY OF HOUSE BILL 1040 1 a certain manner; requiring the Commissioner to adopt certain regulations 2 relating to continuing education requirements; authorizing certain aggrieved 3 persons to file a written complaint with the Commissioner; requiring the 4 Commissioner to investigate the complaint; authorizing the Commissioner to 5 make any other investigation of a person under certain circumstances; requiring 6 a licensee to pay to the Commissioner a certain fee; establishing the 7 Commissioner's examination and enforcement powers; establishing certain 8 notice and hearing requirements; establishing certain penalties for a violation of 9 this Act; providing that the employment of a mortgage originator licensed under 10 this Act by a mortgage lender does not relieve the mortgage lender of certain 11 responsibilities; authorizing the Commissioner to adopt regulations to carry out 12 this Act; defining certain terms; and generally relating to mortgage originators. 13 BY adding to 14 Article - Financial Institutions 15 Section 11-517(f); and 11-601 through 11-618, inclusive, to be under the new 16 subtitle "Subtitle 6. Mortgage Originators" 17 Annotated Code of Maryland 18 (2003 Replacement Volume and 2004 Supplement) 19 SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF 20 MARYLAND, That the Laws of Maryland read as follows: 21 Article - Financial Institutions 22 11-517. 23 (F) THE EMPLOYMENT OF A MORTGAGE ORIGINATOR LICENSED UNDER 24 SUBTITLE 6 OF THIS TITLE BY A MORTGAGE LENDER DOES NOT RELIEVE THE 25 MORTGAGE LENDER OF A RESPONSIBILITY UNDER THIS SUBTITLE, A RULE OR 26 REGULATION ADOPTED UNDER THIS SUBTITLE, OR A LAW GOVERNING MORTGAGE 27 LENDING IN THE STATE. 28 SUBTITLE 6. MORTGAGE ORIGINATORS. 29 11-601. 30 (A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 31 INDICATED. 32 (B) "BORROWER" HAS THE MEANING STATED IN 11-501 OF THIS TITLE. 33 (C) "FUND" MEANS THE MORTGAGE LENDER-ORIGINATOR FUND 34 ESTABLISHED UNDER 11-610 OF THIS SUBTITLE. 35 (D) "LICENSE" MEANS A LICENSE ISSUED BY THE COMMISSIONER UNDER 36 THIS SUBTITLE.
3 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (E) "LICENSEE" MEANS AN INDIVIDUAL WHO IS LICENSED BY THE 2 COMMISSIONER UNDER THIS SUBTITLE. 3 (F) "LOAN APPLICATION" HAS THE MEANING STATED IN 11-501 OF THIS 4 TITLE. 5 (G) "MORTGAGE LENDER" MEANS A PERSON THAT IS LICENSED AS A 6 MORTGAGE LENDER UNDER SUBTITLE 5 OF THIS TITLE. 7 (H) "MORTGAGE LENDING BUSINESS" HAS THE MEANING STATED IN 11-501 8 OF THIS TITLE. 9 (I) "MORTGAGE LOAN" HAS THE MEANING STATED IN 11-501 OF THIS TITLE. 10 (J) (1) "MORTGAGE ORIGINATOR" MEANS AN INDIVIDUAL WHO: 11 (I) IS AN EMPLOYEE OF A MORTGAGE LENDER THAT: 12 1. IS A MORTGAGE BROKER AS DEFINED IN 11-501(I) OF 13 THIS TITLE; OR 14 2. HAS OR WILL HAVE A NET BRANCH OFFICE AT OR OUT OF 15 WHICH THE INDIVIDUAL WORKS OR WILL WORK; AND 16 (II) DIRECTLY CONTACTS PROSPECTIVE BORROWERS FOR THE 17 PURPOSE OF NEGOTIATING WITH OR ADVISING THE PROSPECTIVE BORROWERS 18 REGARDING MORTGAGE LOAN TERMS AND AVAILABILITY; 19 (III) RECEIVES FROM THE MORTGAGE LENDER COMPENSATION 20 THAT IS CALCULATED: 21 1. AS A PERCENTAGE OF THE PRINCIPAL AMOUNT OF 22 MORTGAGE LOANS ORIGINATED BY THE INDIVIDUAL; OR 23 2. AS A PERCENTAGE OF THE INTEREST, FEES, AND 24 CHARGES RECEIVED BY THE MORTGAGE LENDER THAT RESULT FROM MORTGAGE 25 LOAN TRANSACTIONS ORIGINATED BY THE INDIVIDUAL; AND 26 (IV) IS AUTHORIZED TO ACCEPT A LOAN APPLICATION ON BEHALF 27 OF THE MORTGAGE LENDER. 28 (2) "MORTGAGE ORIGINATOR" DOES NOT INCLUDE AN INDIVIDUAL WHO: 29 (I) OWNS A 25 PERCENT OR MORE INTEREST IN THE MORTGAGE 30 LENDER; 31 (II) IS LICENSED UNDER SUBTITLE 5 OF THIS TITLE; OR 32 (III) 1. IS AN EMPLOYEE, OR UNDER EXCLUSIVE CONTRACT WITH 33 AN AFFILIATE, OF A FEDERAL SAVINGS BANK OR FEDERAL SAVINGS ASSOCIATION 34 THAT MAINTAINS A BRANCH OFFICE IN THE STATE THAT ACCEPTS DEPOSITS; AND
4 UNOFFICIAL COPY OF HOUSE BILL 1040 1 2. HAS DUTIES THAT DO NOT INCLUDE HANDLING 2 BORROWER FUNDS OR PERFORMING TASKS RELATED TO UNDERWRITING OR 3 ASSESSING CREDITWORTHINESS. 4 (K) (1) "NET BRANCH OFFICE" MEANS A BRANCH OFFICE OF A MORTGAGE 5 LENDER THAT IS SEPARATELY LICENSED UNDER SUBTITLE 5 OF THIS TITLE IF: 6 (I) AS A CONDITION OF ESTABLISHING THE NET BRANCH, THE 7 MORTGAGE LENDER REQUIRES THE MORTGAGE ORIGINATOR WHO WORKS IN OR OUT 8 OF THE BRANCH OFFICE, OR A PERSON CONTROLLED BY THE MORTGAGE 9 ORIGINATOR, TO PAY AN APPLICATION, LICENSING, FRANCHISE, START-UP, OR 10 OTHER FEE TO THE MORTGAGE LENDER OR DIRECTLY TO THE COMMISSIONER; 11 (II) THE OVERHEAD EXPENSES OF THE NET BRANCH ARE PAID IN 12 WHOLE OR IN PART BY: 13 1. A MORTGAGE ORIGINATOR WHO WORKS IN OR OUT OF 14 THE BRANCH OFFICE; OR 15 2. A PERSON CONTROLLED BY A MORTGAGE ORIGINATOR 16 WHO WORKS IN OR OUT OF THE BRANCH OFFICE; OR 17 (III) THE MORTGAGE LENDER IS NOT: 18 1. AN OBLIGOR ON A LEASE OF THE PREMISES OF THE 19 BRANCH LOCATION; OR 20 2. AN OWNER OF THE PREMISES OF THE BRANCH LOCATION. 21 (2) "NET BRANCH OFFICE" DOES NOT INCLUDE THE MORTGAGE 22 LENDER'S PRINCIPAL OFFICE. 23 11-602. 24 THE COMMISSIONER MAY ADOPT REGULATIONS TO CARRY OUT THIS SUBTITLE. 25 11-603. 26 (A) A LICENSE ISSUED UNDER THIS SUBTITLE AUTHORIZES THE LICENSEE TO 27 ACT AS A MORTGAGE ORIGINATOR ONLY WHEN ACTING WITHIN THE SCOPE OF 28 EMPLOYMENT WITH A MORTGAGE LENDER. 29 (B) A LICENSEE MAY NOT: 30 (1) MAINTAIN MORE THAN ONE LICENSE UNDER THIS SUBTITLE; OR 31 (2) BE EMPLOYED BY MORE THAN ONE MORTGAGE LENDER. 32 (C) (1) THE COMMISSIONER SHALL INCLUDE ON EACH LICENSE: 33 (I) THE NAME OF THE LICENSEE; AND
5 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (II) THE NAME OF THE LICENSEE'S EMPLOYER. 2 (2) UNLESS THE LICENSEE NOTIFIES THE COMMISSIONER IN ADVANCE 3 OF A CHANGE IN THE LICENSEE'S NAME OR THE LICENSEE'S EMPLOYER AND PAYS 4 TO THE COMMISSIONER A LICENSE AMENDMENT FEE OF $75 FOR EACH NOTICE 5 PROVIDED UNDER THIS PARAGRAPH, AN INDIVIDUAL MAY NOT ACT AS A MORTGAGE 6 ORIGINATOR UNDER A NAME OR FOR AN EMPLOYER THAT IS DIFFERENT FROM THE 7 NAME AND EMPLOYER THAT APPEAR ON THE LICENSE. 8 (D) A LICENSE MAY BE ISSUED UNDER THIS SUBTITLE TO AN INDIVIDUAL 9 EMPLOYED BY A MORTGAGE LENDER THE PRINCIPAL OFFICE OF WHICH IS LOCATED 10 OUTSIDE THE STATE IF THE MORTGAGE LENDER MAINTAINS: 11 (1) A RESIDENT AGENT WITHIN THE STATE; AND 12 (2) AN OFFICE WITHIN THE STATE STAFFED BY AT LEAST ONE 13 EMPLOYEE AUTHORIZED TO ORIGINATE MORTGAGE LOANS. 14 11-604. 15 BEGINNING ON JANUARY 1, 2007, AN INDIVIDUAL MAY NOT ACT AS A MORTGAGE 16 ORIGINATOR UNLESS THE INDIVIDUAL IS: 17 (1) A LICENSEE; OR 18 (2) EXEMPT FROM LICENSING UNDER THIS SUBTITLE OR SUBTITLE 5 OF 19 THIS TITLE. 20 11-605. 21 (A) TO QUALIFY FOR A LICENSE, AN APPLICANT SHALL SATISFY THE 22 COMMISSIONER THAT: 23 (1) THE APPLICANT: 24 (I) HAS AT LEAST 3 YEARS OF EXPERIENCE IN THE MORTGAGE 25 LENDING BUSINESS AND HAS COMPLETED THE REQUIRED COURSES FOR 26 CONTINUING EDUCATION ESTABLISHED BY THE COMMISSIONER UNDER 11-612 OF 27 THIS SUBTITLE; OR 28 (II) HAS COMPLETED 40 HOURS OF CLASSROOM EDUCATION 29 CONDUCTED IN THE STATE AND ACHIEVED A PASSING GRADE ON A WRITTEN 30 EXAMINATION DEVELOPED AND ADMINISTERED BY THE PERSON CONDUCTING THE 31 CLASSROOM EDUCATION COURSE APPROVED BY THE COMMISSIONER FOR NEW 32 APPLICANTS; AND 33 (2) THE APPLICANT IS OF GOOD MORAL CHARACTER AND HAS GENERAL 34 FITNESS TO WARRANT THE BELIEF THAT THE APPLICANT WILL ACT AS A MORTGAGE 35 ORIGINATOR IN A LAWFUL, HONEST, FAIR, AND EFFICIENT MANNER.
6 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (B) THE COMMISSIONER MAY DENY AN APPLICATION FOR A LICENSE FILED 2 BY AN INDIVIDUAL WHO HAS COMMITTED AN ACT THAT WOULD SERVE AS A 3 SUFFICIENT GROUND FOR SUSPENSION OR REVOCATION OF A LICENSE UNDER THIS 4 SUBTITLE OR A MORTGAGE LENDER LICENSE UNDER SUBTITLE 5 OF THIS TITLE. 5 (C) THE COMMISSIONER MAY NOT DENY AN APPLICATION BASED SOLELY ON 6 THE APPLICANT'S FINANCIAL CONDITION, CREDIT HISTORY, OR NET WORTH, OR THE 7 INVOLVEMENT OF THE APPLICANT IN A BANKRUPTCY PROCEEDING UNDER TITLE 11 8 OF THE UNITED STATES CODE. 9 11-606. 10 (A) (1) TO APPLY FOR A LICENSE, AN APPLICANT SHALL COMPLETE, SIGN, 11 AND SUBMIT TO THE COMMISSIONER AN APPLICATION MADE UNDER OATH ON THE 12 FORM THAT THE COMMISSIONER REQUIRES. 13 (2) THE APPLICANT SHALL COMPLY WITH ALL CONDITIONS AND 14 PROVISIONS OF THE APPLICATION FOR A LICENSE. 15 (3) THE APPLICATION SHALL INCLUDE: 16 (I) THE APPLICANT'S NAME, SOCIAL SECURITY NUMBER, BUSINESS 17 ADDRESS AND TELEPHONE NUMBER, RESIDENCE ADDRESS, RESIDENCE TELEPHONE 18 NUMBER, AND ELECTRONIC MAIL ADDRESS; 19 (II) THE BUSINESS NAME, BUSINESS ADDRESS, AND TELEPHONE 20 NUMBER OF THE APPLICANT'S EMPLOYER OR PROSPECTIVE EMPLOYER; 21 (III) THE APPLICANT'S RESUME OR WORK EXPERIENCE, INCLUDING 22 THE NAMES AND ADDRESSES OF PREVIOUS EMPLOYERS AND A DESCRIPTION OF 23 EACH JOB OR POSITION HELD BY THE APPLICANT WITH PREVIOUS EMPLOYERS; 24 (IV) A WRITTEN STATEMENT DISCLOSING THE APPLICANT'S 25 PRESENT OR PROSPECTIVE EMPLOYER THAT THE APPLICANT HAS BEEN APPROVED 26 FOR EMPLOYMENT AS A MORTGAGE ORIGINATOR; 27 (V) A WRITTEN STATEMENT DISCLOSING WHETHER THE 28 APPLICANT HAS BEEN CONVICTED OF, PLEADED GUILTY TO, OR PLEADED NOLO 29 CONTENDERE TO A FELONY OR MISDEMEANOR, EXCEPT MINOR TRAFFIC OFFENSES, 30 WITHIN THE PRECEDING 10 YEARS, A DESCRIPTION OF THE NATURE AND 31 DISPOSITION OF ANY DISCLOSED CRIMINAL PROCEEDING, AND THE NAME OF THE 32 COURT WHERE THE PROCEEDING TOOK PLACE; AND 33 (VI) A WRITTEN STATEMENT DISCLOSING WHETHER THE 34 COMMISSIONER, OR ANY OTHER REGULATORY AUTHORITY IN THE STATE OR ANY 35 OTHER JURISDICTION THAT GOVERNS THE MORTGAGE LENDING OR MORTGAGE 36 LOAN ORIGINATION BUSINESS, WITH RESPECT TO THE APPLICANT OR AN ENTITY IN 37 WHICH THE APPLICANT HAS OR HAD ANY OWNERSHIP INTEREST, HAS: 38 1. DENIED AN APPLICATION FOR A LICENSE;
7 UNOFFICIAL COPY OF HOUSE BILL 1040 1 2. REVOKED OR SUSPENDED A LICENSE; OR 2 3. IMPOSED ANY OTHER FORMAL ORDER OR REGULATOR 3 SANCTION. 4 (B) WITH EACH APPLICATION, THE APPLICANT SHALL PAY TO THE 5 COMMISSIONER: 6 (1) A NONREFUNDABLE APPLICATION FEE OF $100; AND 7 (2) A LICENSE FEE OF $300. 8 (C) (1) IN CONNECTION WITH AN APPLICATION FOR A LICENSE UNDER THIS 9 SECTION, AND AT ANY OTHER TIME THAT THE COMMISSIONER REQUESTS, AN 10 APPLICANT OR LICENSEE SHALL PROVIDE FINGERPRINTS FOR USE BY THE FEDERAL 11 BUREAU OF INVESTIGATION AND THE CRIMINAL JUSTICE INFORMATION SYSTEM 12 CENTRAL REPOSITORY OF THE DEPARTMENT OF PUBLIC SAFETY AND 13 CORRECTIONAL SERVICES TO CONDUCT CRIMINAL HISTORY RECORDS CHECKS. 14 (2) AN APPLICANT OR LICENSEE REQUIRED TO PROVIDE FINGERPRINTS 15 UNDER THIS SUBSECTION SHALL PAY ANY PROCESSING OR OTHER FEES REQUIRED 16 BY THE FEDERAL BUREAU OF INVESTIGATION OR THE CRIMINAL JUSTICE 17 INFORMATION SYSTEM CENTRAL REPOSITORY OF THE DEPARTMENT OF PUBLIC 18 SAFETY AND CORRECTIONAL SERVICES. 19 11-607. 20 (A) WHEN AN APPLICANT FOR A LICENSE FILES THE APPLICATION AND PAYS 21 THE FEES REQUIRED BY 11-606 OF THIS SUBTITLE, THE COMMISSIONER SHALL 22 CONDUCT AN INVESTIGATION TO DETERMINE IF THE APPLICANT MEETS THE 23 REQUIREMENTS OF 11-605 OF THIS SUBTITLE. 24 (B) THE COMMISSIONER SHALL ISSUE A LICENSE TO AN APPLICANT WHO 25 MEETS THE REQUIREMENTS OF 11-605 OF THIS SUBTITLE. 26 (C) IF THE COMMISSIONER HAS NOT NOTIFIED THE APPLICANT IN WRITING 27 THAT THE APPLICANT'S APPLICATION IS INCOMPLETE OR HAS BEEN DENIED OR 28 PROVISIONALLY DENIED WITHIN 30 DAYS AFTER THE COMMISSIONER RECEIVES THE 29 COMPLETED APPLICATION, THE APPLICATION SHALL BE CONSIDERED 30 PROVISIONALLY APPROVED. 31 (D) IF THE COMMISSIONER NOTIFIES AN APPLICANT THAT THE APPLICATION 32 IS INCOMPLETE: 33 (1) THE COMMISSIONER'S NOTICE SHALL ITEMIZE THE STEPS WHICH 34 THE APPLICANT MUST TAKE TO COMPLETE THE APPLICATION; AND 35 (2) THE APPLICATION SHALL NOT BE CONSIDERED PROVISIONALLY 36 APPROVED UNTIL 30 DAYS AFTER THE APPLICANT SUPPLIES OR COMPLETES ALL 37 ITEMS AND STEPS IDENTIFIED IN THE COMMISSIONER'S NOTICE.
8 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (E) WHETHER OR NOT AN APPLICATION HAS BEEN PROVISIONALLY 2 APPROVED, THE COMMISSIONER MAY DENY AN APPLICATION: 3 (1) IF THE APPLICANT FAILS TO QUALIFY FOR A LICENSE UNDER THIS 4 SUBTITLE; OR 5 (2) FOR ANY REASON THAT A LICENSE MAY BE REVOKED OR 6 SUSPENDED UNDER THIS SUBTITLE OR A MORTGAGE LENDER LICENSE MAY BE 7 SUSPENDED OR REVOKED UNDER 11-517 OF THIS TITLE. 8 (F) THE COMMISSIONER SHALL APPROVE OR DENY AN APPLICATION WITHIN 9 60 DAYS AFTER THE COMMISSIONER RECEIVES A COMPLETED APPLICATION. 10 11-608. 11 (A) IF THE COMMISSIONER DENIES AN APPLICATION, THE COMMISSIONER: 12 (1) WITHIN 10 DAYS, SHALL NOTIFY THE APPLICANT, IN WRITING, OF 13 THE DENIAL; 14 (2) SHALL REFUND THE LICENSE FEE; AND 15 (3) SHALL KEEP THE INVESTIGATION FEE. 16 (B) WITHIN 30 DAYS AFTER THE COMMISSIONER DENIES AN APPLICATION, 17 THE COMMISSIONER SHALL: 18 (1) ISSUE A WRITTEN DECISION CONTAINING THE SPECIFIC FACTUAL 19 FINDINGS AND CONCLUSIONS OF LAW ON WHICH THE DENIAL WAS BASED; 20 (2) SEND A COPY OF THE WRITTEN DECISION BY CERTIFIED MAIL TO 21 THE APPLICANT; AND 22 (3) ADVISE THE APPLICANT BY CERTIFIED MAIL OF THE APPLICANT'S 23 RIGHT TO A HEARING TO BE HELD IN ACCORDANCE WITH THE ADMINISTRATIVE 24 PROCEDURE ACT. 25 (C) AN APPLICANT WHO SEEKS A HEARING ON AN APPLICATION DENIAL 26 SHALL FILE WITH THE COMMISSIONER'S OFFICE A WRITTEN REQUEST FOR A 27 HEARING WITHIN 45 DAYS AFTER RECEIPT OF THE COMMISSIONER'S WRITTEN 28 DECISION AND NOTICE OF THE APPLICANT'S RIGHT TO A HEARING. 29 11-609. 30 (A) A LICENSE ISSUED ON OR AFTER OCTOBER 1, 2006, EXPIRES ON DECEMBER 31 31 IN EACH ODD-NUMBERED YEAR AFTER DECEMBER 31, 2006, UNLESS THE LICENSE 32 IS RENEWED FOR A 2-YEAR TERM AS PROVIDED IN THIS SECTION. 33 (B) ON OR BEFORE DECEMBER 1 OF THE YEAR OF EXPIRATION, A LICENSE 34 MAY BE RENEWED FOR AN ADDITIONAL 2-YEAR TERM IF THE LICENSEE:
9 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (1) OTHERWISE IS ENTITLED TO BE LICENSED; 2 (2) PAYS TO THE COMMISSIONER A RENEWAL FEE OF $300; AND 3 (3) SUBMITS TO THE COMMISSIONER: 4 (I) A RENEWAL APPLICATION ON THE FORM THAT THE 5 COMMISSIONER REQUIRES; AND 6 (II) SATISFACTORY EVIDENCE OF COMPLIANCE WITH ANY 7 CONTINUING EDUCATION REQUIREMENTS SET BY REGULATIONS ADOPTED BY THE 8 COMMISSIONER. 9 (C) IF A LICENSE IS SURRENDERED VOLUNTARILY OR IS SUSPENDED OR 10 REVOKED, THE COMMISSIONER MAY NOT REFUND ANY PART OF THE LICENSE FEE 11 REGARDLESS OF THE TIME REMAINING IN THE LICENSE TERM. 12 (D) NOTWITHSTANDING SUBSECTIONS (A) AND (B) OF THIS SECTION, THE 13 COMMISSIONER MAY DETERMINE THAT A LICENSE ISSUED UNDER THIS SUBTITLE 14 SHALL EXPIRE ON A STAGGERED BASIS. 15 11-610. 16 (A) THERE IS A MORTGAGE LENDER-ORIGINATOR FUND THAT CONSISTS OF: 17 (1) REVENUE RECEIVED FOR THE LICENSING OF INDIVIDUALS UNDER 18 THIS SUBTITLE; 19 (2) REVENUE RECEIVED FOR THE LICENSING OF INDIVIDUALS UNDER 20 SUBTITLE 5 OF THIS TITLE; 21 (3) INCOME FROM THE INVESTMENTS THAT THE STATE TREASURER 22 MAKES FOR THE FUND; AND 23 (4) ANY OTHER FEE, EXAMINATION ASSESSMENT, OR REVENUE 24 RECEIVED BY THE COMMISSIONER UNDER SUBTITLE 5 OF THIS TITLE AND THIS 25 SUBTITLE. 26 (B) NOTWITHSTANDING SUBSECTION (A) OF THIS SECTION, THE 27 COMMISSIONER SHALL PAY ALL FINES AND PENALTIES COLLECTED BY THE 28 COMMISSIONER UNDER SUBTITLE 5 OF THIS TITLE AND THIS SUBTITLE INTO THE 29 GENERAL FUND OF THE STATE. 30 (C) THE PURPOSE OF THE FUND IS TO PAY THE COSTS AND EXPENSES 31 INCURRED BY THE COMMISSIONER THAT ARE RELATED TO THE REGULATION OF 32 MORTGAGE LENDING AND MORTGAGE ORIGINATION, INCLUDING: 33 (1) EXPENDITURES AUTHORIZED UNDER SUBTITLE 5 OF THIS TITLE OR 34 THIS SUBTITLE; AND 35 (2) ANY OTHER EXPENSE AUTHORIZED IN THE STATE BUDGET.
10 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (D) (1) THE ANNUAL STATE BUDGET SHALL INCLUDE THE COSTS AND 2 EXPENSES OF THE COMMISSIONER RELATING TO THE REGULATION OF MORTGAGE 3 LENDING AND MORTGAGE ORIGINATION. 4 (2) ANY EXPENDITURES FROM THE FUND TO COVER COSTS AND 5 EXPENSES OF THE COMMISSIONER MAY BE MADE ONLY: 6 (I) WITH AN APPROPRIATION FROM THE FUND APPROVED BY THE 7 GENERAL ASSEMBLY IN THE ANNUAL STATE BUDGET; OR 8 (II) BY THE BUDGET AMENDMENT PROCEDURE PROVIDED FOR IN 9 7-209 OF THE STATE FINANCE AND PROCUREMENT ARTICLE. 10 (3) IF, IN ANY FISCAL YEAR, THE AMOUNT OF THE REVENUE COLLECTED 11 BY THE COMMISSIONER AND DEPOSITED INTO THE FUND EXCEEDS THE ACTUAL 12 APPROPRIATION FOR THE COMMISSIONER TO REGULATE MORTGAGE LENDING AND 13 MORTGAGE ORIGINATION UNDER THIS SUBTITLE, THE EXCESS AMOUNT SHALL BE 14 CARRIED FORWARD WITHIN THE FUND. 15 (E) (1) THE STATE TREASURER IS THE CUSTODIAN OF THE FUND. 16 (2) THE STATE TREASURER SHALL DEPOSIT PAYMENTS RECEIVED FROM 17 THE COMMISSIONER INTO THE FUND. 18 (F) (1) (I) THE FUND IS A SPECIAL, NONLAPSING FUND THAT IS NOT 19 SUBJECT TO 7-302 OF THE STATE FINANCE AND PROCUREMENT ARTICLE. 20 (II) THE FUND MAY NOT BE DEEMED A PART OF THE GENERAL 21 FUND OF THE STATE. 22 (2) UNLESS OTHERWISE PROVIDED BY LAW, NO PART OF THE FUND MAY 23 REVERT OR BE CREDITED TO: 24 (I) THE GENERAL FUND OF THE STATE; OR 25 (II) A SPECIAL FUND OF THE STATE. 26 11-611. 27 (A) BEGINNING IN FISCAL YEAR 2006, THE GOVERNOR SHALL APPROPRIATE IN 28 THE ANNUAL STATE BUDGET FUNDS TO THE DIVISION OF FINANCIAL REGULATION 29 FOR THE PURPOSE OF CREATING NECESSARY POSITIONS TO IMPLEMENT THE 30 PROVISIONS OF THIS SUBTITLE. 31 (B) AN AMOUNT EQUAL TO THE GOVERNOR'S APPROPRIATION UNDER 32 SUBSECTION (A) OF THIS SECTION SHALL BE REPAID BY THE FUND TO THE GENERAL 33 FUND OF THE STATE ON OR BEFORE JUNE 30, 2008. 34 11-612. 35 (A) THE COMMISSIONER SHALL ADOPT REGULATIONS THAT:
11 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (1) SET CONTINUING EDUCATION REQUIREMENTS AS A CONDITION TO 2 THE RENEWAL OF A LICENSE UNDER THIS SUBTITLE; AND 3 (2) PRESCRIBE RULES FOR THE CLASSROOM EDUCATION REQUIREMENT 4 PROVIDED FOR IN 11-605(A) OF THIS SUBTITLE. 5 (B) ANY CONTINUING EDUCATION REQUIREMENT ESTABLISHED BY THE 6 COMMISSIONER UNDER THIS SECTION SHALL APPLY TO THE FIRST RENEWAL OF A 7 LICENSE. 8 11-613. 9 (A) (1) ANY PERSON AGGRIEVED BY THE CONDUCT OF A LICENSEE UNDER 10 THIS SUBTITLE IN CONNECTION WITH A MORTGAGE LOAN MAY FILE A WRITTEN 11 COMPLAINT WITH THE COMMISSIONER WHO SHALL INVESTIGATE THE COMPLAINT. 12 (2) THE COMMISSIONER MAY MAKE ANY OTHER INVESTIGATION OF A 13 LICENSEE IF THE COMMISSIONER HAS REASONABLE CAUSE TO BELIEVE THAT THE 14 LICENSEE HAS VIOLATED ANY PROVISION OF THIS SUBTITLE, OF ANY REGULATION 15 ADOPTED UNDER THIS SUBTITLE, OR OF ANY OTHER LAW REGULATING MORTGAGE 16 LENDING OR MORTGAGE ORIGINATION IN THE STATE. 17 (B) A LICENSEE SHALL PAY TO THE COMMISSIONER A FEE OF NOT MORE 18 THAN $250 PER DAY FOR EACH OF THE COMMISSIONER'S EMPLOYEES ENGAGED IN 19 ANY INVESTIGATION CONDUCTED UNDER THIS SECTION THAT RESULTS IN THE 20 DISCOVERY OF A VIOLATION OF THIS SUBTITLE BY THE LICENSEE. 21 (C) IN CONNECTION WITH AN INVESTIGATION MADE UNDER THIS SECTION, 22 THE COMMISSIONER MAY: 23 (1) EXAMINE THE BOOKS AND RECORDS OF A LICENSEE OR OF ANY 24 OTHER PERSON THAT THE COMMISSIONER BELIEVES HAS VIOLATED A PROVISION 25 OF THIS SUBTITLE, ANY RULE OR REGULATION ADOPTED UNDER THIS SUBTITLE, OR 26 ANY OTHER LAW REGULATING MORTGAGE LENDING OR MORTGAGE ORIGINATION IN 27 THE STATE; 28 (2) SUBPOENA DOCUMENTS OR OTHER EVIDENCE; AND 29 (3) SUMMON AND EXAMINE UNDER OATH ANY PERSON WHOSE 30 TESTIMONY THE COMMISSIONER REQUIRES. 31 (D) (1) IF A PERSON FAILS TO COMPLY WITH A SUBPOENA OR SUMMONS OF 32 THE COMMISSIONER UNDER THIS SUBTITLE OR TO TESTIFY CONCERNING ANY 33 MATTER ABOUT WHICH THE PERSON MAY BE INTERROGATED UNDER THIS 34 SUBTITLE, THE COMMISSIONER MAY FILE A PETITION FOR ENFORCEMENT WITH THE 35 CIRCUIT COURT FOR A COUNTY. 36 (2) ON PETITION BY THE COMMISSIONER, THE COURT MAY ORDER THE 37 PERSON TO ATTEND AND TESTIFY OR PRODUCE EVIDENCE.
12 UNOFFICIAL COPY OF HOUSE BILL 1040 1 11-614. 2 (A) IF THE COMMISSIONER FINDS THAT THE CONDUCT OF ANY OTHER 3 BUSINESS CONCEALS A VIOLATION OR EVASION OF THIS SUBTITLE OR ANY RULE OR 4 REGULATION ADOPTED UNDER THIS SUBTITLE, OR ANY LAW REGULATING 5 MORTGAGE LENDING OR MORTGAGE ORIGINATION IN THE STATE, THE 6 COMMISSIONER MAY ISSUE A WRITTEN ORDER TO A LICENSEE TO STOP DOING 7 BUSINESS: 8 (1) AT ANY PLACE IN WHICH THE OTHER BUSINESS IS CONDUCTED OR 9 SOLICITED; OR 10 (2) IN ASSOCIATION OR CONJUNCTION WITH THE OTHER BUSINESS. 11 (B) A LICENSEE WHO VIOLATES AN ORDER OF THE COMMISSIONER ISSUED 12 UNDER THIS SECTION SHALL BE SUBJECT TO THE PENALTIES PROVIDED BY 11-615 13 OF THIS SUBTITLE. 14 (C) THE COMMISSIONER MAY FILE A PETITION IN THE CIRCUIT COURT FOR A 15 COUNTY SEEKING ENFORCEMENT OF AN ORDER UNDER THIS SECTION. 16 11-615. 17 (A) SUBJECT TO THE HEARING PROVISIONS OF 11-616 OF THIS SUBTITLE, 18 THE COMMISSIONER MAY SUSPEND OR REVOKE THE LICENSE OF ANY LICENSEE IF 19 THE LICENSEE: 20 (1) MAKES ANY MATERIAL MISSTATEMENT IN AN APPLICATION FOR A 21 LICENSE; 22 (2) IS CONVICTED UNDER THE LAWS OF THE UNITED STATES OR OF ANY 23 STATE OF A FELONY OR A MISDEMEANOR THAT IS DIRECTLY RELATED TO THE 24 FITNESS AND QUALIFICATION OF THE INDIVIDUAL TO ACT AS A MORTGAGE 25 ORIGINATOR; 26 (3) IN CONNECTION WITH ANY MORTGAGE LOAN OR LOAN APPLICATION 27 TRANSACTION: 28 (I) COMMITS ANY FRAUD; 29 (II) ENGAGES IN ANY ILLEGAL OR DISHONEST ACTIVITIES; OR 30 (III) MISREPRESENTS OR FAILS TO DISCLOSE ANY MATERIAL FACTS 31 TO A PERSON ENTITLED TO THAT INFORMATION; 32 (4) VIOLATES ANY PROVISION OF THIS SUBTITLE, ANY REGULATION 33 ADOPTED UNDER THIS SUBTITLE, OR ANY OTHER LAW REGULATING MORTGAGE 34 LENDING OR MORTGAGE ORIGINATION IN THE STATE; OR
13 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (5) OTHERWISE DEMONSTRATES UNWORTHINESS, BAD FAITH, 2 DISHONESTY, OR ANY OTHER QUALITY THAT INDICATES THAT THE BUSINESS OF THE 3 LICENSEE HAS NOT BEEN OR WILL NOT BE CONDUCTED HONESTLY. 4 (B) IN DETERMINING WHETHER A LICENSE SHALL BE SUSPENDED OR 5 REVOKED FOR A REASON DESCRIBED IN SUBSECTION (A)(2) OF THIS SECTION, THE 6 COMMISSIONER SHALL CONSIDER: 7 (1) THE NATURE OF THE CRIME; 8 (2) THE RELATIONSHIP OF THE CRIME TO THE ACTIVITIES AUTHORIZED 9 BY THE LICENSE; 10 (3) WITH RESPECT TO A FELONY, THE RELEVANCE OF THE CONVICTION 11 TO THE FITNESS AND QUALIFICATION OF THE LICENSEE TO ENGAGE IN THE 12 MORTGAGE LENDING OR MORTGAGE ORIGINATION BUSINESS; 13 (4) THE LENGTH OF TIME SINCE THE CONVICTION; AND 14 (5) THE BEHAVIOR AND ACTIVITIES OF THE LICENSEE SINCE THE 15 CONVICTION. 16 (C) (1) THE COMMISSIONER MAY ENFORCE THE PROVISIONS OF THIS 17 SUBTITLE, REGULATIONS ADOPTED UNDER THIS SUBTITLE, AND THE APPLICABLE 18 PROVISIONS OF TITLE 12 OF THE COMMERCIAL LAW ARTICLE BY: 19 (I) ISSUING AN ORDER: 20 1. TO CEASE AND DESIST FROM THE VIOLATION AND ANY 21 FURTHER SIMILAR VIOLATIONS; AND 22 2. REQUIRING THE VIOLATOR TO TAKE AFFIRMATIVE 23 ACTION TO CORRECT THE VIOLATION, INCLUDING THE RESTITUTION OF MONEY OR 24 PROPERTY TO ANY PERSON AGGRIEVED BY THE VIOLATION; AND 25 (II) IMPOSING A CIVIL PENALTY NOT EXCEEDING $1,000 FOR EACH 26 VIOLATION. 27 (2) IF A VIOLATOR FAILS TO COMPLY WITH AN ORDER ISSUED UNDER 28 PARAGRAPH (1)(I) OF THIS SUBSECTION, THE COMMISSIONER MAY IMPOSE A CIVIL 29 PENALTY NOT EXCEEDING $1,000 FOR EACH VIOLATION FROM WHICH THE VIOLATOR 30 FAILED TO CEASE AND DESIST OR FOR WHICH THE VIOLATOR FAILED TO TAKE 31 AFFIRMATIVE ACTION TO CORRECT. 32 (D) THE COMMISSIONER MAY FILE A PETITION IN THE CIRCUIT COURT FOR A 33 COUNTY SEEKING ENFORCEMENT OF AN ORDER ISSUED UNDER THIS SECTION. 34 (E) IN DETERMINING THE AMOUNT OF A CIVIL PENALTY IMPOSED UNDER 35 SUBSECTION (C) OF THIS SECTION, THE COMMISSIONER SHALL CONSIDER: 36 (1) THE SERIOUSNESS OF THE VIOLATION;
14 UNOFFICIAL COPY OF HOUSE BILL 1040 1 (2) THE GOOD FAITH OF THE VIOLATOR; 2 (3) THE VIOLATOR'S HISTORY OF PREVIOUS VIOLATIONS; 3 (4) THE DELETERIOUS EFFECT OF THE VIOLATION ON THE PUBLIC AND 4 MORTGAGE INDUSTRY; 5 (5) THE ASSETS OF THE VIOLATOR; AND 6 (6) ANY OTHER FACTORS RELEVANT TO THE DETERMINATION OF THE 7 CIVIL PENALTY. 8 11-616. 9 (A) BEFORE THE COMMISSIONER TAKES ANY ACTION UNDER 11-614 OR 10 11-615 OF THIS SUBTITLE, THE COMMISSIONER SHALL GIVE THE LICENSEE AN 11 OPPORTUNITY FOR A HEARING. 12 (B) NOTICE OF THE HEARING SHALL BE GIVEN AND THE HEARING SHALL BE 13 HELD IN ACCORDANCE WITH THE ADMINISTRATIVE PROCEDURE ACT. 14 (C) THE HEARING NOTICE TO THE LICENSEE SHALL BE SENT BY CERTIFIED 15 MAIL, RETURN RECEIPT REQUESTED, TO THE PRINCIPAL PLACE OF BUSINESS OF THE 16 LICENSEE AT LEAST 30 DAYS BEFORE THE HEARING. 17 11-617. 18 ANY PERSON WHO WILLFULLY VIOLATES THE PROVISIONS OF THIS SUBTITLE 19 IS GUILTY OF A FELONY AND, ON CONVICTION, IS SUBJECT TO A FINE NOT 20 EXCEEDING $25,000 OR IMPRISONMENT NOT EXCEEDING 5 YEARS OR BOTH. 21 11-618. 22 THE EMPLOYMENT OF A MORTGAGE ORIGINATOR LICENSED UNDER THIS 23 SUBTITLE BY A MORTGAGE LENDER DOES NOT RELIEVE THE MORTGAGE LENDER OF 24 A RESPONSIBILITY UNDER THIS SUBTITLE, A RULE OR REGULATION ADOPTED 25 UNDER THIS SUBTITLE, OR A LAW GOVERNING MORTGAGE LENDING IN THE STATE. 26 SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 27 October 1, 2005.